Wall Street trade groups sue CFTC over Dodd-Frank

Suit focuses on chairman's late push for rules

The U.S. Commodity Futures Trading Commission was sued by three Wall Street trade groups claiming its policy governing overseas trades is confusing, lacks coordination with other regulatory agencies and impedes banks’ derivatives trading.

The CFTC failed to conduct a cost-benefit analysis and follow other requirements of rulemaking in crafting regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act, according to the suit, filed today in federal court in Washington by the Securities Industry and Financial Markets Association, the International Swaps and Derivatives Association and the Institute of International Bankers.

“This flawed attempt to act as the paramount regulator of international swaps trading, even where there is no significant connection with United States commerce, will harm investors, impair U.S. and foreign businesses, impose inconsistent, duplicative requirements on firms that are regulated by other nations, and exceeds the CFTC’s lawful authority,” the trade groups claimed.

The suit challenges a flurry of rule-making and advisory opinions by the CFTC’s departing chairman, Gary Gensler. Gensler, 56, has fought a five-year battle with the industry over how to draw up a safer and more open marketplace for derivatives, the products that helped push the world economy to the precipice in 2008.

The groups asked the court to throw out a package of CFTC regulations of overseas trades, known as the cross border rule.